Shares in the European home improvement sector fell sharply after a major retailer predicted subdued profit growth for 2025/26, citing ongoing market challenges. The company expects adjusted pre-tax profit of £480 million to £540 million for the year ending January 2026, below analysts' average forecast of £543 million. Following the announcement, its stock dropped by 11%.
Kingfisher, which owns B&Q and Screwfix in the UK and Castorama and Brico Depot in France, reported a 7% decline in adjusted pre-tax profit for 2024/25, down to £528 million. The company attributed this to weak demand for high-value home improvement items, such as kitchens and bathrooms. Revenue also fell by 1.5% to £12.8 billion, despite an increase in market share across all key regions for the first time in six years.
CEO Thierry Garnier pointed to macroeconomic uncertainty, increased operating costs, and policy changes in the UK and France as key pressures on the business. The company faces £145 million in additional costs for 2025/26 due to rising wages, higher social security contributions, and new packaging regulations.
Market growth forecasts remain modest, with the UK and Ireland expected to see "low single-digit growth," France remaining "flat," and Poland experiencing "low single-digit growth." To navigate these challenges, Kingfisher plans to focus on expanding its market share, strengthening its e-commerce and trade sales, and continuing the restructuring of Castorama in France.
Despite the cautious outlook, the company announced a new £300 million share buyback programme, following the completion of a previous buyback of the same value. It also maintained its dividend at 12.40 pence per share.
Source: www.reuters.com